SOURCE: Russell Investments

Russell Investments

October 04, 2013 09:03 ET

Re-Emerging Europe: European Developed Market Equities Outperformed U.S. Equities by Nearly 7.5% in the Third Quarter, According to Russell Indexes

SEATTLE, WA--(Marketwired - Oct 4, 2013) -  Stocks in developed European markets outperformed other developed market equities (excluding the U.S.) by about 2% and U.S. equities by nearly 7.5% for the third quarter, according to Russell Indexes. Also, notably, the current valuation for the Russell Developed Europe Index as of September 30th is lower than that of the Russell Developed ex-US Index and the Russell 3000 Index. 

  • For 2013 year-to-date as of September 30, U.S. stocks as reflected by the Russell 3000 Index still lead with an 18.1% return relative to a 14.9% return for the Russell Developed Europe Index for the same time period. For the last twelve months as of September 30, developed European stocks have also outperformed U.S. stocks.

  • For the third quarter, Russell Developed Europe Index country constituents Spain (+20.7%), Finland (+18.7%) and Italy (+15.2) led within the Index.

  • The Russell Developed Europe Index is also fairly valued relative to the Russell Developed ex-US Index and the Russell 3000 Index. It has a 17.5 one year forward estimated weighted average price to earnings ratio (P/E) as of September 30, relative to an 18.0 and 25.7 P/E for the Russell Developed ex-US Index and Russell 3000 Index, respectively. The Russell 3000 Index P/E reflects a marked increase from its 18.5 P/E on December 31, 2012.

"Several factors have contributed to the strong recent performance of European equities relative to equities in the U.S. and non-U.S. developed markets," said Wouter Sturkenboom, investment strategist with Russell Investments Europe. "We continue to see improving economic fundamentals in Europe combined with relatively low market valuations. In addition, capital flows into European equities are strong, the Draghi-led ECB remains dovish and discussion around the fiscal austerity agenda is lessening. These conditions have combined to help create a favorable climate for European equities." 

Index   3rd Qtr 2013   2013 YTD as of 9/30   1 Year as of 9/30/13
Russell Developed Europe Index   9.5%   14.9%   20.0%
Russell Developed ex-U.S. Index   7.4%   12.9%   16.6%
Russell 3000 Index   2.1%   18.1%   15.6%
Russell Developed Europe Index Country            
Spain   20.7%   16.0%   24.81%
Finland   18.7%   25.0%   36.5%
Italy   15.2%   10.9%   19.5%
Austria   14.1%   7.6%   24.3%
France   11.8%   18.5%   28.1%
Luxembourg   11.4%   0.3%   4.7%
Sweden   10.7%   17.7%   20.5%
Ireland   10.2%   28.1%   30.7%
Germany   8.5%   14.6%   21.4%
United Kingdom   8.4%   12.5%   14.9%
Portugal   7.7%   13.4%   25.0%
Netherlands   7.2%   11.2%   14.1%
Switzerland   6.1%   18.5%   24.7%
Norway   3.4%   2.8%   2.0%

Source: Russell Investments. P/E figures from FactSet.

Please note: Indexes are unmanaged and cannot be invested in directly. Returns represent past performance, are not a guarantee of future performance, and are not indicative of any specific investment. Russell's publication of the Indexes or Index constituents in no way suggests or implies a representation or opinion by Russell as to the attractiveness of investing in a particular security. Inclusion of a security in an Index is not a promotion, sponsorship or endorsement of a security by Russell and Russell makes no representation, warranty or guarantee with respect to the performance of any security included in a Russell Index. 

Past performance does not guarantee future performance. This material is not an offer, solicitation or recommendation to purchase any security. Returns cited are euro-denominated.

Opinions expressed by Mr. Sturkenboom reflect market performance and observations as of September 30, 2013 and are subject to change at any time based on market or other conditions without notice. 

Nothing contained in this material is intended to constitute legal, tax, securities or investment advice, nor an opinion regarding the appropriateness of any investment, nor a solicitation of any type. The general information contained in this publication should not be acted upon without obtaining specific legal, tax and investment advice from a licensed professional. The information, analysis and opinions expressed herein are for general information only and are not intended to provide specific advice or recommendations for any individual entity.

Russell Investment Group is a Washington, USA corporation, which operates through subsidiaries worldwide, including Russell Investments, and is a subsidiary of The Northwestern Mutual Life Insurance Company.